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Annual Report

Trading Term

An annual report is a comprehensive document that a corporation prepares and publishes at the end of each fiscal year to provide shareholders, investors, and the public with a detailed overview of the company’s financial performance, operations, strategy, and governance. For publicly traded companies, producing an annual report is typically a legal requirement, regulated by financial authorities such as the U.S. Securities and Exchange Commission (SEC).

What’s typically in an Annual Report?

  1. Letter to Shareholders – A narrative from the CEO or chairman, summarizing the company’s performance, strategic outlook, and key developments.
  2. Management Discussion and Analysis (MD&A) – A section where management explains financial results, trends, risks, and business strategy in narrative form.
  3. Financial Statements – Includes the income statement, balance sheet, cash flow statement, and notes to the financials, providing insight into the company’s profitability, financial health, and accounting practices.
  4. Auditor’s Report – An independent auditor’s opinion on whether the financial statements are presented fairly in accordance with accounting standards (e.g., GAAP or IFRS).
  5. Corporate Governance and ESG Information – Disclosure of the board structure, executive compensation, sustainability initiatives, and ethical practices.

The annual report is a key resource for evaluating a company’s performance, transparency, and future prospects. Investors use it to make informed decisions, while analysts and regulators assess the company’s compliance, strategy, and risks. For many companies, the annual report also serves as a public relations document, reinforcing their brand and values to stakeholders.

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